CUs Are Adopting Novel Approaches to Card Marketing That Score Turnarounds
ST. PETERSBURG, Fla. -- Credit unions continue to innovate and better manage their credit card portfolios.
Six years ago Card Services for Credit Unions, the association of credit unions that process their card transactions on the Fidelity National Information Systems platform, began highlighting credit union efforts to strengthen and improve their card programs. At the time many in the industry shared the impression that credit unions could not manage their card portfolios in a competitive manner, and Card Services sought to make the point that with intelligence, creativity and some hard work CUs could turn around even failing card portfolios.
The medium they chose to make their point was the CAMEO awards, honoring member credit unions that managed and grew their card portfolios particularly well and set an example for others.
When credit unions first got into the credit and debit card business, it was a time of easy money. Portfolios didn't need much guidance, Card Services said when announcing the CAMEO winners this year.
"Put a brochure and poster in the lobby and you're good to go. Now there is so much competition that a credit union needs to actively manage its card portfolio--including marketing, research, advertising, publicity and member service."
Card Services believes that if you work your portfolio even a little, it can grow and be the most profitable portion of a credit union's loan portfolio.
"This year our credit unions had some phenomenal marketing campaigns," said Robert Hackney, Card Services president. "These credit unions saw a lot of successes with platinum campaigns and rewards, and we are excited to honor their achievements."
Winners this year included Suncoast Schools FCU, Tampa, Fla., which won for its public relations campaign on financial literacy. The CU brought in Derrick Brooks, a popular player with the NFL's Tampa Bay Buccaneers, to speak to young people about the importance of being financially literate.
Purdue Employees FCU, West Lafayette, Ind., won for its television commercial that built on the CUs connection with the popular school. Purdue grad and NFL Quarterback Drew Brees promoted the Alumni Visa card. The spots were created with the Purdue University school song played by the Purdue Marching Band in the background.
New Mexico Educators FCU won recognition for its community rewards tie-in for its card program. The CU lets members who have a Visa check card enroll in the program and have a choice of a community and category of charitable cause. At the end of the program year, the member receives a 0.25% cash reward based on their annual signature-based purchase and the credit union matches their reward amount and supplies it to the community and category of the member's choice. Communities include local cities and categories include work in education, health, the arts, environment and wildlife or community support.
The awards even included one for Bellco FCU, Wyomissing, Pa. The CU had sold its card portfolio to Elan Financial Services and, when its agent contract expired, declined to renew it and got back into issuing on its own. The CU incorporated a well-rounded campaign and acquired hundreds of new accounts with $1.36 million in credit lines and $232,000 in actual balances, the association reported.
And, as has become customary for the CAMEOs, the awards included the work of smaller credit unions with smaller card portfolios.
Richmond Community Credit Union, Augusta, Ga., had only $19 million in assets when it reported its success in an award application (now it has $22 million). The CU saw its card portfolio increase by 100 card accounts and its receivable balances by $17,000, according to Cindy Bonner, vice president for operations for the CU.
"The portfolio had never gone into decline," Bonner explained, "but it hadn't really done much of anything and that's what we wanted to change."
Bonner explained that the CU got the ideas for improving the card portfolio's performance by working with the Georgia Credit Union League and attending Card Services' annual conference, which featured card performance ideas. Working with both was particularly useful, she said, because they had plenty of ideas for doing things to improve the program without spending a great deal of money. All in all, she said, Richmond Community only spent $300 on its card portfolio improvement effort.
She reported that the CU spent $150 on implementing a credit limit increase program and the balance on limited promotional efforts renting a popcorn machine to promote the CUs new rewards program to their members. Increasing credit limits is often one of the least expensive and effective things a credit union can do to help bring growth to its card portfolio.
The $2.5 billion San Antonio Credit Union won a CAMEO award for the development and launching of one of the first credit union affinity credit card tied to a local major league sports team. The CU has been the official credit union of the NBA's San Antonio Spurs for some time and has launched a SACU Spurs Silver Card Platinum MasterCard.
San Antonio has about 235,000 members and a card portfolio of roughly 28,000 cards that belong to several Visa and MasterCard programs. In the five months since the program launched in February 2007, the credit union said MasterCard accounts grew from 1,936 to 2,710, a 29% increase. The overall portfolio increased by $1 million for a new total of $5.2 million, more than a 20% increase in the total portfolio value. San Antonio increased the total number of transactions by 14% and finance charge revenue increased by 15.5%, the CU reported.
"The response from our members has been very enthusiastic," explained Charles Smith, director of lending for the CU. "And this is only the first step in being able to offer an affinity card where cardholders will be able to earn points toward Spurs specific rewards like merchandise, discounts on travel to away games and experience opportunities with the team."